Category

Most Read

Most Read: Aozora Bank Ltd, Alibaba Group Holding , Goodman Group, Shriram Finance , Pi Industries, Woori Financial Group , Kokusai Electric , Korea Stock Exchange KOSPI 200, Sankei Real Estate and more

By | Daily Briefs, Most Read

In today’s briefing:

  • JAPAN ACTIVISM:  Is Murakami-San Going To Do A PacMetals Rug Pull on Aozora? Or Is This For Real?
  • Aozora Bank (8304 JP): Murakami Becomes a Substantial Shareholder
  • Alibaba Group Holdings: EM Fund Positioning Update
  • Goodman Group (GMG AU): Positioned for Outperformance
  • NIFTY50 Index Rebalance: Shriram Finance to Replace UPL
  • NIFTY NEXT50 Index Rebalance: Five Changes on Expected Lines; Big Turnover
  • Woori Financial Placement – While the Overhang Remains, the Deal Would Be Easily Digested
  • TOPIX “Big April Basket” 2024 Expectations: More High-Conviction Names; Better Trade Ideas
  • Clearing up Confusion About Bringing Back Short Selling in Korea
  • Sankei Real Estate (2972) Sponsor Buy Now On And It Isn’t Small (Even if the REIT Is)


JAPAN ACTIVISM:  Is Murakami-San Going To Do A PacMetals Rug Pull on Aozora? Or Is This For Real?

By Travis Lundy

  • Yesterday after the close, well-known Japanese activist Murakami-san’s preferred entity City Index Eleventh filed a Large Shareholder Report. 
  • The blast across Bloomberg was “*AOZORA 5.4% STAKE REPORTED BY CITY INDEX ELEVENTH.” Sounds exciting after the shares dropped 34% in two days earlier this month after reporting big writedowns. 
  • But there has to be a question here. Why? And Why this way? And what kind of activism would be possible? 

Aozora Bank (8304 JP): Murakami Becomes a Substantial Shareholder

By Arun George

  • Murakami’s entity, City Index Eleventh, reported a 5.42% shareholding in Aozora Bank Ltd (8304 JP). Murakami started buying a day after the disastrous 3QFY23 results.
  • Murakami’s average buy-in price is JPY2,137.88 per share, a 34% discount to the pre-3QFY23 results share price. 
  • Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term trading play replicating the Pacific Metals (5541 JP) playbook.

Alibaba Group Holdings: EM Fund Positioning Update

By Steven Holden

  • Despite average weights falling from over 6% in 2020 to under 2% today, 73% of EM funds remain invested in Alibaba.
  • The make up of the investor base has changed, with a rotation between high growth investors (out) and Value investors (in).
  • Of the 73% of current holders, the core portfolio weight range sits between 1.5% and 3%, with the most bullish topping out at 5%+

Goodman Group (GMG AU): Positioned for Outperformance

By Brian Freitas

  • Goodman Group (GMG AU) has been moving higher recently and the stock has outperformed its peers handily over the last year.
  • The stock trades marginally expensive compared to its peers and that could be partially attributed to the stock being a part of large indices.
  • There is another index inclusion to come and that could lead to further outperformance in the short term.

NIFTY50 Index Rebalance: Shriram Finance to Replace UPL

By Brian Freitas


NIFTY NEXT50 Index Rebalance: Five Changes on Expected Lines; Big Turnover

By Brian Freitas

  • There are five changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) that will be implemented at the close on 27 March. Changes are on expected lines.
  • Estimated one-way turnover for the NSE Nifty Next 50 Index (NIFTYJR INDEX) is 10.1% resulting in a one-way trade of INR 22.2bn (US$268m).
  • Apart from the impact on the adds and deletes, there will be a big impact on some of the non-F&O stocks due to capping and funding flows.

Woori Financial Placement – While the Overhang Remains, the Deal Would Be Easily Digested

By Clarence Chu

  • IMM PE, via Obis1, is looking to raise US$136m from selling a portion of its stake in Woori Financial Group (316140 KS).
  • While the deal doesn’t look particularly well-flagged, the PE has been invested for quite some time now. 
  • Despite the overhang, the deal is a small one to digest at just 1.7% of total shares outstanding, representing 5 days of the firm’s ADV.

TOPIX “Big April Basket” 2024 Expectations: More High-Conviction Names; Better Trade Ideas

By Janaghan Jeyakumar, CFA

  • The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation.
  • For companies with “low liquidity” the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation.
  • Every April, the application of this liquidity factor is reviewed by the TSE. In this insight, we take an early look at what could happen in April 2024.

Clearing up Confusion About Bringing Back Short Selling in Korea

By Sanghyun Park

  • Government sees foreign investors as key for Corporate Value-Up success, considering reinstating short selling.
  • Planning to expand short selling beyond 350 stocks, but anticipating pushback from retail investors, likely capping additional stocks around 100.
  • The head of the Financial Supervisory Service will formally disclose these plans during the upcoming short selling conference scheduled for March 13th.

Sankei Real Estate (2972) Sponsor Buy Now On And It Isn’t Small (Even if the REIT Is)

By Travis Lundy

  • Last October, I wrote about the plan the sponsor of Sankei Real Estate (2972 JP) had to exchange buildings with the REIT to clean it up, then buy more units.
  • Today they announced the completion of the Portfolio Rebalancing Plan started in March 2023. And the plan to buy more units. The assets transferred out were gone at end Jan-2024.
  • Now that’s done, and there are units to buy. Maximum 46,652 units over maximum 220 days.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Analytics and News
  • ✓ Events & Webinars



Most Read: Renesas Electronics, CK Asset Holdings, Welcia Holdings, Toshiba Corp, Ecopro BM , Korea Stock Exchange KOSPI 200, New World Development, Aozora Bank Ltd, APM Human Services Internation and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Renesas (6723) – YET ANOTHER Clean-Up Block Trade – This Time Mitsubishi Elec
  • Hong Kong To Scrap All “Spicy Measures” (Property Cooling Measures)
  • Tsuruha (3391) And Welcia (3141) – Aeon Tsuruha Stake Buy Followed by Merger! [Redux]
  • Beyond the Bubble: A Deep Dive into the Forces Behind the Nikkei Index Surge
  • Ecopro BM (247540 KS): Index Impact of KOSDAQ to KOSPI Transfer
  • Confirmed: Conditions & Schedule of Block Deals Pre-Disclosure Rules in Korea
  • Hong Kong: Stamp Duties Axed; Mortgage Rules Relaxed
  • JAPAN ACTIVISM:  Is Murakami-San Going To Do A PacMetals Rug Pull on Aozora? Or Is This For Real?
  • Aozora Bank (8304 JP): Murakami Becomes a Substantial Shareholder
  • APM Human Services (APM AU): CVC’s 141% Offer Premium


Renesas (6723) – YET ANOTHER Clean-Up Block Trade – This Time Mitsubishi Elec

By Travis Lundy

  • Today after the close, Mitsubishi Electric (6503 JP) announced the sale of its position in Renesas Electronics (6723 JP). That’s 50,706,800 shares.  
  • This is the third large block in four months (Renesas in November for 223mm shares, NEC and Hitachi in January 2024 for 123mm shares).
  • This is smaller, and reasonably well-flagged. Index demand is longer-dated.

Hong Kong To Scrap All “Spicy Measures” (Property Cooling Measures)

By Travis Lundy

  • RTHK just reporting that HK Finance Secretary Paul Chan has said in his budget speech that HK will remove all property cooling measures in place, with immediate effect. 
  • That would be That is Special Stamp Duty, Buyer’s Stamp Duty, New Residential Stamp Duty. “Measures no longer necessary given the current economic and market conditions.”
  • This should cause people to get excited short-term about property developers.

Tsuruha (3391) And Welcia (3141) – Aeon Tsuruha Stake Buy Followed by Merger! [Redux]

By Travis Lundy

  • The first piece had a question mark in the title. This one has an exclamation point. The exclamation point has value for one investor. Other people? Not so much.
  • Today post-close we got the deal. I was a little surprised it came this fast, but it’s now mostly done it appears – largely as predicted in the last piece.
  • There are things one can probably read into the details. It is probably worth thinking about those, and how those details affect the industry. 

Beyond the Bubble: A Deep Dive into the Forces Behind the Nikkei Index Surge

By Nimish Maheshwari

  • Japan’s Nikkei Stock Average has surged past its 1989 peak, fueled by global investor interest, corporate reforms, and innovative investment initiatives like the Nippon Individual Savings Account (NISA).
  • This resurgence marks a significant milestone in Japan’s economic landscape, reflecting renewed investor confidence, structural reforms, and potential growth opportunities in the market.
  • The Nikkei’s surpassing of its previous peak signals a shift in perception towards Japan’s market potential, prompting investors to reconsider the country’s economic trajectory and explore new avenues for investment.

Ecopro BM (247540 KS): Index Impact of KOSDAQ to KOSPI Transfer

By Brian Freitas

  • Ecopro BM (247540 KS)‘s Board has approved the delisting of the stock from the KOSDAQ market and to list on the KOSPI market. The shareholder meeting is on 26 March. 
  • Historically, the KRX has taken an average of 64 days from application to approve the listing to transfer from the KOSDAQ market to the KOSPI market.
  • Ecopro BM (247540 KS) will be deleted from the KOSDAQ 150 Index on its last trading day and inclusion in the KOSPI 200 Index could take place in September.

Confirmed: Conditions & Schedule of Block Deals Pre-Disclosure Rules in Korea

By Sanghyun Park

  • Insiders must disclose transaction details, complete deals within 30 days, limit deviations to 30%, and submit disclosures 30 days before transactions.
  • Financial investors, including institutional ones, are exempt. This encompasses local pension funds (including NPS) and foreign financial investors. Deals under 1% of total shares and less than ₩5B are exempt.
  • Confirmation of the timeline indicates many block deals before July. We should hunt potential deals for proactive setups. Also, we should monitor basis widening in futures due to short-selling ban.

Hong Kong: Stamp Duties Axed; Mortgage Rules Relaxed

By David Blennerhassett

  • Hong Kong residential property prices declined 7% in 2023 and are down >20% from the 2021 peak in 2021. The average price of offices also declined ~7% in 2023.
  • Scrapping property cooling measures, such as the special stamp duty applied to homes resold within 24 months, have been rumoured, to push up housing prices. 
  • In today’s annual budget, we got those. And then some. 

JAPAN ACTIVISM:  Is Murakami-San Going To Do A PacMetals Rug Pull on Aozora? Or Is This For Real?

By Travis Lundy

  • Yesterday after the close, well-known Japanese activist Murakami-san’s preferred entity City Index Eleventh filed a Large Shareholder Report. 
  • The blast across Bloomberg was “*AOZORA 5.4% STAKE REPORTED BY CITY INDEX ELEVENTH.” Sounds exciting after the shares dropped 34% in two days earlier this month after reporting big writedowns. 
  • But there has to be a question here. Why? And Why this way? And what kind of activism would be possible? 

Aozora Bank (8304 JP): Murakami Becomes a Substantial Shareholder

By Arun George

  • Murakami’s entity, City Index Eleventh, reported a 5.42% shareholding in Aozora Bank Ltd (8304 JP). Murakami started buying a day after the disastrous 3QFY23 results.
  • Murakami’s average buy-in price is JPY2,137.88 per share, a 34% discount to the pre-3QFY23 results share price. 
  • Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term trading play replicating the Pacific Metals (5541 JP) playbook.

APM Human Services (APM AU): CVC’s 141% Offer Premium

By David Blennerhassett

  • Back on the 19th Feb, employment and disability services play APM Human Services Internation (APM AU) rejected PE-outfit CVC Asia Pacific’s A$1.60 proposal, a 93% premium to undisturbed.
  • Undeterred, CVC has returned with A$2.00/share indicative Offer, by way of a Scheme, a 141% premium to undisturbed; yet a 44% discount to APM’s November 2021 IPO price of A$3.55/share.
  • APM has determined it will engage and provide CVC with a four-week period of exclusivity. 

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Analytics and News
  • ✓ Events & Webinars



Most Read: Toei Animation, Hyundai Electric & Energy, Tongcheng Travel Holdings , Rakuten Group , Li Auto , Outsourcing Inc, Samsonite, Ecopro BM , Sfa Engineering and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Toei Animation (4816 JP) – This Offering Could Be Heavy; the NEXT Offering Is More Interesting
  • KOSPI Size Indices – Potential Migrations as Focus Is on Price to Book
  • Final Flows for Hang Seng, HSCEI, HS Tech on 1 March Rebal
  • Rakuten’s New “Bond-Type Share” Issuance – Quite Quirky to Quantulate Rakuten’s Quisquous New Quoz
  • HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (Mar 2024)
  • Outsourcing (2427) MBO Arrives! Bain Launches Cheeky, Opportunistic, Low(Priced) TOB
  • Samsonite (1910 HK): Leader Of The Pack
  • Ecopro BM KOSPI Transfer Listing Disclosure
  • Block Deal Sale of 5% Stake In SFA Engineering by Samsung Display
  • Outsourcing (2427 JP): Relief as Bain Launches Tender at Unchanged Terms


Toei Animation (4816 JP) – This Offering Could Be Heavy; the NEXT Offering Is More Interesting

By Travis Lundy


KOSPI Size Indices – Potential Migrations as Focus Is on Price to Book

By Brian Freitas

  • The review period for the March rebalance of the KOSPI Size Indices started 1 December and will end 29 February. The changes will be implemented at the close 14 March.
  • We see 3 migrations from MidCap to LargeCap, 4 new adds to LargeCap, 7 migrations from LargeCap to MidCap, and 11 migrations from SmallCap to MidCap.
  • On average, stocks migrating from SmallCap to MidCap have the lowest price to book value and have historically outperformed stocks migrating between other categories.

Final Flows for Hang Seng, HSCEI, HS Tech on 1 March Rebal

By Travis Lundy

  • The Hang Seng Index, HSCEI, and HS Tech rebals were announced on 16 Feb. Janaghan Jeyakumar, CFA had expected GDS out, Tongcheng Travel in on HSTECH, along with the…
  • …deletion of Zhongsheng Group (881 HK) in HSCEI, with a low conviction replacement of Zijin Mining, which turned out to be an add of China Unicom Hong Kong (762 HK)
  • No changes to the main HSI Index, which means evolution is further delayed. Today was the day to recap the caps. Mar1 Flow estimates are included below for all three.

Rakuten’s New “Bond-Type Share” Issuance – Quite Quirky to Quantulate Rakuten’s Quisquous New Quoz

By Travis Lundy

  • Today, Rakuten Group (4755 JP) announced it would propose an amendment to its Articles at the AGM (28 March) to issue “Bond-Type Class Shares.”   First reaction: You wot, mate?
  • The company states it wants to “strengthen its financial base through reducing interesting-bearing debt by equity-related financings and conduct proactive control of debt maturity schedule, etc.”
  • Now it wants to issue listed bond-type shares. Dividends not interest. The last Japanese issuer of something similar was NEC in 2001. Few will remember, so we study the situation.

HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (Mar 2024)

By Brian Freitas


Outsourcing (2427) MBO Arrives! Bain Launches Cheeky, Opportunistic, Low(Priced) TOB

By Travis Lundy

  • After an extension due to a European Foreign Subsidies Review filing, and a small ‘accident’ regarding the earnings release, we have a deal. 
  • The earnings release itself seemed more innocuous than articles and rumour suggested show the causes of impairments and so it seemed like there was little cause to walk/declare MAC.
  • Now it will be done in 20 days. I still think this is cheeky, opportunistic, and low, and it is up to the float to decide what to do.

Samsonite (1910 HK): Leader Of The Pack

By David Blennerhassett

  • Luggage maker Samsonite (1910 HK) is up 11.8% today, as I type, after Bloomberg reported it is working with advisers as it studies possibilities, including going private.
  • With the reopening of China and the ongoing recovery in travel globally, Samsonite’s net sales improved markedly across all regions. 1H23 profit gained 185.3% versus 1H22.
  • FY23 figures should be out in the middle of next month.

Ecopro BM KOSPI Transfer Listing Disclosure

By Sanghyun Park

  • The schedule includes submitting the transfer listing application post-EGM on March 26th. KRX approval expected in 4-6 weeks due to Ecopro BM’s financial soundness. KOSPI listing follows in 2-3 weeks.
  • As for KOSDAQ 150 ad-hoc change, it will be replaced with the top reserved issue. The anticipated timing for this ad-hoc change is around mid or late May.
  • Following Feb 7 disclosure, stock surged over 10% in 2 days. Precedents show rallies pre-shareholder meetings, but KOSPI listing brings corrections. Today’s resolution could boost Ecopro BM short term.

Block Deal Sale of 5% Stake In SFA Engineering by Samsung Display

By Douglas Kim

  • After the market close on 27 February, Samsung Display announced that it will sell its 4.95% stake in Sfa Engineering (056190 KS) in a block deal sale. 
  • We would take the trade. We like the relatively large block deal sale discount as well as the company’s attractive valuations. 
  • SFA Engineering is trading at P/E of 8.3x, EV/EBITDA of 2.7x, and P/B of 0.7x in 2024, which are much lower than historical valuations.

Outsourcing (2427 JP): Relief as Bain Launches Tender at Unchanged Terms

By Arun George

  • Outsourcing Inc (2427 JP) announced that the pre-condition was satisfied, and Bain’s tender offer remains unchanged at JPY1,755 per share, a 52.1% premium to the undisturbed (8 December).
  • Shareholders will breathe a sigh of relief as the weak 4Q and significant impairments have raised concerns that Bain would cut its offer or walk away.
  • The offer attractiveness has increased partly due to lower consensus. At the last close and for a 3 April payment, the gross/annualised spread is 2.0%/22.8%.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Analytics and News
  • ✓ Events & Webinars



Most Read: Keisei Electric Railway Co, Tsuruha Holdings, Korea Stock Exchange KOSPI 200, Bio-Thera Solutions Ltd, Rakuten Bank , Alibaba (ADR), Alumina Ltd, Toei Animation and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Keisei Electric Rail (9009) – A BUYBACK! But It’s Likely To Be Crossholders Selling in ToSTNeT-3
  • Tsuruha (3391) And Welcia (3141) – Aeon Tsuruha Stake Buy Followed by Merger?
  • Details of Korea Value-Up Initiatives & Index, Announced This Morning
  • STAR100 Index Rebalance: Ten Changes a Side; Adds Outperforming as Expected
  • Rakuten Bank (5838 JP) – Introduces a Yutai Program to Goose the Mar24 Price, Mar25 EPS
  • Alibaba (9988 HK):  Value Proposition Looks Clean
  • Alcoa (AA US) Makes an Offer for Alumina (AWC AU)
  • Toei Animation (4816 JP): The Current Playbook
  • Aeon, Welcia and Tsuruha: Creating an FMCG Behemoth
  • StubWorld: Keisei Electric Appears Stretched Amid Latest Buyback


Keisei Electric Rail (9009) – A BUYBACK! But It’s Likely To Be Crossholders Selling in ToSTNeT-3

By Travis Lundy

  • Keisei Electric Railway Co (9009 JP) has long been the target of activist-ish-y holders who seek to have the company monetise its 20+% stake in Oriental Land (4661 JP)
  • Last autumn (17-Oct-2023), Keisei was the subject of a presentation by activist-ish-y fund Palliser Capital who called the stock 43% undervalued. They want Keisei to sell some OLC shares.
  • Palliser wanted Keisei to use resulting monies for growth capex+shareholder return, improve IR/governance, shrink board, adopt KPIs, etc. Thursday we got an announcement of a 2.9% stock buyback. 

Tsuruha (3391) And Welcia (3141) – Aeon Tsuruha Stake Buy Followed by Merger?

By Travis Lundy

  • Over the weekend there was an article in the Nikkei saying that Tsuruha Holdings (3391 JP) and Welcia Holdings (3141 JP) were considering a merger. Other media outlets followed.
  • This has been a possible outcome. Aeon Co Ltd (8267 JP) owns 51% of Welcia, 13.6% in Tsuruha, and is negotiating to buy another 13% in Tsuruha from Oasis.
  • This would create a behemoth. ¥2.2trln in revenues vs ¥1trln for MatsukiyoCocokara (3088 JP). It would be 25% of the market. Questions will be asked about concentration. 

Details of Korea Value-Up Initiatives & Index, Announced This Morning

By Sanghyun Park

  • The rollout of the Korea Value-Up Index has encountered a minor delay. Completion of the index is slated for 3Q, with ETFs scheduled for release in 4Q.
  • The government will encourage the National Pension Service to utilize it as a benchmark.
  • Dividend payout ratio, dividend yield, PER, and cash flow will be included as screening factors for this index, in addition to the already known factors of PBR and ROE.

STAR100 Index Rebalance: Ten Changes a Side; Adds Outperforming as Expected

By Brian Freitas

  • There are 10 changes for the STAR100 Index in March. We correctly forecast all 10 deletes and got 8 of the 10 adds right.
  • Estimated one-way turnover is 6.8% and that results in a one-way trade of CNY 1.79bn. Nearly all constituent changes have more than 1 day of ADV to trade.
  • The adds have started to outperform the deletes and the index over the last couple of weeks and there could be more outperformance in the next two weeks.

Rakuten Bank (5838 JP) – Introduces a Yutai Program to Goose the Mar24 Price, Mar25 EPS

By Travis Lundy

  • The Rakuten Bank offering in early December was a great time to buy the dip of you sold end-September. It should have been a good time to buy outright.
  • Unfortunately, the stock priced at ¥2,470, then closed that day at ¥2,500. That was the high for the next ten weeks. Two weeks later it was 20% lower. Ouch.
  • But it climbed out of the abyss, gained 35% in 8wks, then Thursday the Bank announced a new Shareholder Benefit program. Today the stock was +7%. Worth looking at details.

Alibaba (9988 HK):  Value Proposition Looks Clean

By Steve Zhou, CFA

  • It is well-known that Alibaba (ADR) (BABA US) is cheap (9x FY24 PE, fiscal year ending March; 8x FY23 free cash flow; net cash 25% of market cap).
  • Taking into account all of the major moving parts, I believe Alibaba can now be categorized as a good value stock. 
  • Shareholder returns through buyback and dividend, minus stock-based compensation in 2023 calendar year equal to around 5% yield.

Alcoa (AA US) Makes an Offer for Alumina (AWC AU)

By Brian Freitas

  • Alcoa (AA US) has made a non-binding, indicative and conditional proposal to acquire all shares in Alumina (AWC AU). Shareholders will receive 0.02854 shares of Alcoa for each Alumina share. 
  • Alcoa (AA US) has entered into an agreement with Allan Gray Australia that gives them the right to acquire 19.9% of Alumina Ltd (AWC AU) at the same swap ratio.
  • Alumina Ltd (AWC AU) is a potential delete from the ASX100 Index at the March rebalance and that could provide an entry into the stock.

Toei Animation (4816 JP): The Current Playbook

By Arun George

  • Since the US$550 million secondary placement announcement, Toei Animation (4816 JP)’s shares are down 7.0% from the undisturbed price of JPY18,560 per share (14 February).
  • Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Toei Animation’s shares have followed the pattern of previous large placements.
  • The offering will likely be priced on 27 February. Investors participating in previous large Japanese placements tend to secure positive returns.

Aeon, Welcia and Tsuruha: Creating an FMCG Behemoth

By Michael Causton

  • The possible merger between Welcia and Tsuruha under Aeon has been talked about for years despite concerns from both drugstores, but may now happen.
  • But calling these retailers drugstores is increasingly a misnomer: FMCG-drugstores is better because they and many others in the sector, increasingly compete with FMCG retailers like supermarkets and even CVS.
  • This evolution is rapid so the merits of a deal make more sense when we view it from a sector five years in the future than how it is today.

StubWorld: Keisei Electric Appears Stretched Amid Latest Buyback

By David Blennerhassett

  • Keisei Electric (9009 JP) has been an outperformer since activist fund Palliser Capital called on the company sell some Oriental Land (4661 JP) shares. It has now announced another buyback.
  • Preceding my comments on Keisei Electric are the current setup/unwind tables for Asia-Pacific Holdcos.
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Analytics and News
  • ✓ Events & Webinars



Most Read: Baimtec Material , ESR Group , Keisei Electric Railway Co, Bio-Thera Solutions Ltd, Hygon Information Technology C, Hyosung Corporation, Superloop Ltd, Taiwan Semiconductor (TSMC) – ADR, Walgreens Boots Alliance, Korea Stock Exchange KOSPI 200 and more

By | Daily Briefs, Most Read

In today’s briefing:

  • STAR50 Index Rebalance: Three Changes a Side; One Surprise Change
  • ESR Group (1821 HK): Evaluating a Potential Privatisation
  • Keisei Electric Rail (9009) – A BUYBACK! But It’s Likely To Be Crossholders Selling in ToSTNeT-3
  • STAR100 Index Rebalance: Ten Changes a Side; Adds Outperforming as Expected
  • Index Rebalance & ETF Flow Recap: HSCEI, HSCI, HSTECH, HSIII, STTF, Top50, Div+, FXI, FnGuide
  • Hyosung Corp (004800 KS): Spin-Off & KOSPI200 Index Implications
  • Aussie Broadband’s Non-Binding Indicative Offer for Superloop
  • Taiwan Dual-Listings Monitor: TSMC Post-CNY Spread Persisting; Why UMC Discount Could Flip Positive
  • Walgreens Boots Alliance (WBA US) – How Do Dow Jones Deletes Do Historically?
  • Details of Korea Value-Up Initiatives & Index, Announced This Morning


STAR50 Index Rebalance: Three Changes a Side; One Surprise Change

By Brian Freitas

  • There are three constituent changes for the SSE STAR50 (STAR50 INDEX) at the March rebalance. One inclusion and one non-inclusion are surprises.
  • One way turnover is estimated at 2.9% and will result in a one-way trade of CNY 4,075m with over 2.5x ADV to trade on all constituent changes.
  • The adds have outperformed the deletes over the last few months with a jump in the last few trading sessions. There could be more outperformance over the next two weeks.

ESR Group (1821 HK): Evaluating a Potential Privatisation

By Arun George

  • On 21 February, Bloomberg reported that due to the steep share price declines, major ESR Group (1821 HK) shareholders are considering options for their stakes, including ESR’s privatisation.
  • The reports also noted buyer interest in ESR’s significant assets. Past share dealings suggest that Warburg Pincus and the co-founders are the likely consortium to lead a potential privatisation. 
  • The offer probability is low as a scheme would likely require a HK$16.00 offer, posing a funding challenge. Nevertheless, the upside remains as ESR trades at an undemanding valuation. 

Keisei Electric Rail (9009) – A BUYBACK! But It’s Likely To Be Crossholders Selling in ToSTNeT-3

By Travis Lundy

  • Keisei Electric Railway Co (9009 JP) has long been the target of activist-ish-y holders who seek to have the company monetise its 20+% stake in Oriental Land (4661 JP)
  • Last autumn (17-Oct-2023), Keisei was the subject of a presentation by activist-ish-y fund Palliser Capital who called the stock 43% undervalued. They want Keisei to sell some OLC shares.
  • Palliser wanted Keisei to use resulting monies for growth capex+shareholder return, improve IR/governance, shrink board, adopt KPIs, etc. Thursday we got an announcement of a 2.9% stock buyback. 

STAR100 Index Rebalance: Ten Changes a Side; Adds Outperforming as Expected

By Brian Freitas

  • There are 10 changes for the STAR100 Index in March. We correctly forecast all 10 deletes and got 8 of the 10 adds right.
  • Estimated one-way turnover is 6.8% and that results in a one-way trade of CNY 1.79bn. Nearly all constituent changes have more than 1 day of ADV to trade.
  • The adds have started to outperform the deletes and the index over the last couple of weeks and there could be more outperformance in the next two weeks.

Index Rebalance & ETF Flow Recap: HSCEI, HSCI, HSTECH, HSIII, STTF, Top50, Div+, FXI, FnGuide

By Brian Freitas

  • The changes for the SSE STAR50 (STAR50 INDEX) and STAR100 Index were announced post market close on Friday.
  • The coming week is a full one with capping cutoffs, review cutoffs, announcements and implementations apart from futures expiries.
  • With China open after Lunar New Year, the National Team is back pouring money into ETFs with the largest inflows to the CSI 300, CSI 500, ChiNext and STAR50 indices.

Hyosung Corp (004800 KS): Spin-Off & KOSPI200 Index Implications

By Brian Freitas

  • Hyosung Corporation (004800 KS) has announced that it is spinning off part of its business holdings to Hyosung New Holding Corporation in a 0.818:0.182 ratio.
  • The stock will remain suspended from late June to late July. We expect Hyosung Corporation (004800 KS) to maintain its index membership while the New Entity will not be added.
  • The dynamics between listed ETFs and non-listed passive trackers differ and we take a look at the potential index flows.

Aussie Broadband’s Non-Binding Indicative Offer for Superloop

By Brian Freitas


Taiwan Dual-Listings Monitor: TSMC Post-CNY Spread Persisting; Why UMC Discount Could Flip Positive

By Vincent Fernando, CFA

  • TSMC: +17.3% Premium, High Double Digit Level Persisting Since CNY
  • UMC: -1.5% Discount, We Believe Spread Biased to Go Positive
  • ChipMOS: +0.6% Premium, Collapsed from +4.6%. Now Within Typical Range.

Walgreens Boots Alliance (WBA US) – How Do Dow Jones Deletes Do Historically?

By Travis Lundy

  • On 31 January, Walmart (WMT US) announced a 3:1 stock split. For cognoscenti, that meant a Dow Jones Industrial Avg might be in the offing.
  • The last change to the index was in Aug-2020, spurred by the 4:1 split for Apple (AAPL US). This time, the likely deletion candidate was Walgreens Boots Alliance (WBA US)
  • Indeed, last week, the Index Keepers announced Amazon.com Inc (AMZN US) would replace Walgreens Boots Alliance on 26 Feb (i.e. WBA would be booted on the close of 23 Feb).

Details of Korea Value-Up Initiatives & Index, Announced This Morning

By Sanghyun Park

  • The rollout of the Korea Value-Up Index has encountered a minor delay. Completion of the index is slated for 3Q, with ETFs scheduled for release in 4Q.
  • The government will encourage the National Pension Service to utilize it as a benchmark.
  • Dividend payout ratio, dividend yield, PER, and cash flow will be included as screening factors for this index, in addition to the already known factors of PBR and ROE.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Analytics and News
  • ✓ Events & Webinars



Most Read: East Buy Holding , China Unicom Hong Kong, Amazon.com Inc, Jusung Engineering, Celltrion Inc, Taiwan Semiconductor (TSMC), Trip.com Group , Korea Stock Exchange KOSPI 200, Hygon Information Technology C, China International Capital Corporation and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Hang Seng Internet & IT Index Rebalance: Three Changes & One Big Surprise
  • HSCEI Index Rebalance: Third Time Unlucky for Zhongsheng (881 HK) As China Unicom (762 HK) In
  • Dow Jones Industrials (INDU) Index Rebalance: Amazon (AMZN) Replaces Walgreen Boots (WBA)
  • FnGuide Semiconductor Top10 Index Rebalance Preview: One Change Likely; Close Among Potential Adds
  • FnGuide Top10 Equal Weight Index Rebalance Preview: Celltrion Could Replace Samsung SDI
  • TSMC (2330.TT; TSM.US): The Implications of Feb Sales, TSMC 2nd Japanese Fab and NVDA Stock Price.
  • Hong Kong/China Finally Bottoming?; Bullish Outlook Intact; DXY Rolling Over; Buys in Discretionary
  • EQD | Where to BUY the KOSPI On The Upcoming Pullback
  • Index Rebalance & ETF Flow Recap: HSCEI, HSCI, HSTECH, HSIII, STTF, Top50, Div+, FXI, FnGuide
  • A/H Premium Tracker (To 23 Feb 2024):  Liquid AH Premia See Sharpest Fall in a LOONG (He-He) Time


Hang Seng Internet & IT Index Rebalance: Three Changes & One Big Surprise

By Brian Freitas

  • There will be 3 changes for the Hang Seng Internet & Information Technology Index (HSIII) at the March rebalance. There are some surprises.
  • Estimated one-way turnover at the rebalance is 5.6% resulting in a round-trip trade of HK$3.26bn (US$416m). 6 stocks will have over 1x ADV to trade.
  • There is huge short interest on East Buy Holding (1797 HK) and there could be some short covering ahead of the inclusion of the stock in the index.

HSCEI Index Rebalance: Third Time Unlucky for Zhongsheng (881 HK) As China Unicom (762 HK) In

By Brian Freitas


Dow Jones Industrials (INDU) Index Rebalance: Amazon (AMZN) Replaces Walgreen Boots (WBA)

By Brian Freitas


FnGuide Semiconductor Top10 Index Rebalance Preview: One Change Likely; Close Among Potential Adds

By Brian Freitas


FnGuide Top10 Equal Weight Index Rebalance Preview: Celltrion Could Replace Samsung SDI

By Brian Freitas


TSMC (2330.TT; TSM.US): The Implications of Feb Sales, TSMC 2nd Japanese Fab and NVDA Stock Price.

By Patrick Liao

  • Usually, February is typically the month with the fewest working days of the year, and therefore, revenue is likely to be at its lowest as well.
  • We consider that the Taiwanese government may desire TSMC to build fabs in countries aligned with those who signed the “Wassenaar Arrangement.” 
  • The price hike of NVIDIA Corp (NVDA US) by US$785.38 on February 22 in the US market could signal an important development in the AI sector.

Hong Kong/China Finally Bottoming?; Bullish Outlook Intact; DXY Rolling Over; Buys in Discretionary

By Joe Jasper

  • Since early November 2023 we have been expecting global equities (MSCI ACWI) to stage a year-end rally that would continue into the early part of 2024.
  • As we progress through the “early part” of 2024, more global indexes and Sectors are breaking out and starting to participate in the upside. This is classic bull market behavior.
  • Our outlook remains bullish; continue to ride this trend higher, and treat pullbacks as buying opportunities. Actionable Themes: Hong Kong/China, Consumer Discretionary, Industrials, Energy/Coal, and Polish Banks

EQD | Where to BUY the KOSPI On The Upcoming Pullback

By Nico Rosti

  • The KOSPI 200 INDEX has been rallying since January 2022, roughly up +22.5%, the rally can continue, but soon there could be a pullback, possibly this coming week.
  • If the index falls from its current highs, where are the best support levels to go LONG again?
  • The price area between 355 and 345 is where the index could find support and resume the uptrend.

Index Rebalance & ETF Flow Recap: HSCEI, HSCI, HSTECH, HSIII, STTF, Top50, Div+, FXI, FnGuide

By Brian Freitas

  • The changes for the SSE STAR50 (STAR50 INDEX) and STAR100 Index were announced post market close on Friday.
  • The coming week is a full one with capping cutoffs, review cutoffs, announcements and implementations apart from futures expiries.
  • With China open after Lunar New Year, the National Team is back pouring money into ETFs with the largest inflows to the CSI 300, CSI 500, ChiNext and STAR50 indices.

A/H Premium Tracker (To 23 Feb 2024):  Liquid AH Premia See Sharpest Fall in a LOONG (He-He) Time

By Travis Lundy

  • The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
  • SOUTHBOUND and NORTHBOUND flows net positive. AH premia on average fell so Hs OUTperformed As by 2.1%. Liquid Hs saw their H outperform the A by 3.1% on average.
  • Last week was the sharpest one-week fall in AH premium in a very long time.  SOUTHBOUND Flows Monitor here. NORTHBOUND Flows Monitor here.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Analytics and News
  • ✓ Events & Webinars



Most Read: China Traditional Chinese Medicine, Amazon.com Inc, Gree Inc, Jusung Engineering, Samsung C&T, Celltrion Inc, Fast Retailing, Reddit , Alteogen Inc and more

By | Daily Briefs, Most Read

In today’s briefing:

  • TCM (570 HK): Sinopharm’s $4.60/Share Offer
  • Dow Jones Industrials (INDU) Index Rebalance: Amazon (AMZN) Replaces Walgreen Boots (WBA)
  • Gree (3632 JP) – Overnight Offering in Asset-Rich Value Trap as KDDI Sells Out
  • China Traditional Chinese Medicine (570 HK): Sinopharm-Led Pre-Conditional Offer at HK$4.60
  • FnGuide Semiconductor Top10 Index Rebalance Preview: One Change Likely; Close Among Potential Adds
  • The Launch of 1st Corporate Value Up ETF on 27 February – Focus on Low PBR and Cash Flow
  • FnGuide Top10 Equal Weight Index Rebalance Preview: Celltrion Could Replace Samsung SDI
  • HK CEO & Director Dealings (23 Feb 2024): Fast Retailing, Far East Consortium, Pharmaron Beijing
  • Reddit IPO Preview
  • Alteogen (196170 KS): Modified License Agreement For Major Platform Technology Is A Hard Catalyst


TCM (570 HK): Sinopharm’s $4.60/Share Offer

By David Blennerhassett

  • $4.60/Share. That’s the number – by way of a Scheme – that only matters. Below the recently rumoured $6/share, and $5.10/share a little over three years ago. Terms are final.
  • As widely expected, the Offeror is SASAC-managed China National Pharmaceutical Group Corporation (CNPGC), indirectly owning 32.46% in China Traditional Chinese Medicine (570 HK) (TCM) via Sinopharm Group Hongkong,
  • Optically, the Offer price appears light. But this should still get up. TCM is trading rich to peers. No other competing bidder will emerge. Expect regulatory pre-cons to be fast-tracked.

Dow Jones Industrials (INDU) Index Rebalance: Amazon (AMZN) Replaces Walgreen Boots (WBA)

By Brian Freitas


Gree (3632 JP) – Overnight Offering in Asset-Rich Value Trap as KDDI Sells Out

By Travis Lundy

  • Today after the close, KDDI Corp (9433 JP) and Gree Inc (3632 JP) announced that KDDI would offer its 8,000,000 shares in Gree in an international offering through Mizuho Intl.
  • The deal comes at a decently large discount and the stock is quite downtrodden. Especially when compared to its venture assets and cash, assuming invested amount is remotely viable.
  • The problem is that too much of revenue isn’t earning much, so this sits in a Value Trap category. Shareholder structure makes it difficult to do buybacks.

China Traditional Chinese Medicine (570 HK): Sinopharm-Led Pre-Conditional Offer at HK$4.60

By Arun George

  • China Traditional Chinese Medicine (570 HK) announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.
  • The pre-condition relates to various Chinese regulatory approvals. As SOE entities own the offeror, regulatory approvals will be a formality. The offer price is final. 
  • Ping An Insurance (H) (2318 HK), which holds a blocking stake, will be supportive. The offer is fair when the previously (higher) rumoured offers are adjusted for the market downturn. 

FnGuide Semiconductor Top10 Index Rebalance Preview: One Change Likely; Close Among Potential Adds

By Brian Freitas


The Launch of 1st Corporate Value Up ETF on 27 February – Focus on Low PBR and Cash Flow

By Douglas Kim

  • Samsung Asset Management announced today that it will be launching the first Corporate Value Up ETF on 27 February. It will focus on low PBR and positive cash flow generators.
  • This ETF which will be called KoAct Dividend Growth Active ETF. There are about 45 stocks that are expected to be included in this ETF. 
  • Among the 92 companies in KOSPI 200 that are trading at less than 1x PBR, those that generate positive free cash flow are outperforming significantly. 

FnGuide Top10 Equal Weight Index Rebalance Preview: Celltrion Could Replace Samsung SDI

By Brian Freitas


HK CEO & Director Dealings (23 Feb 2024): Fast Retailing, Far East Consortium, Pharmaron Beijing

By David Blennerhassett


Reddit IPO Preview

By Douglas Kim

  • Reddit is getting ready for an IPO in the United States in the next several weeks. It is expected that this IPO will be completed in March. 
  • The company was previously valued at US$10 billion in a funding round in 2021. It is expected that the company could sell about 10% of its shares in this IPO.
  • Reddit may be seeking a valuation of at least US$5 billion in this IPO, which would be nearly half its valuation it received in 2021 in a private funding round. 

Alteogen (196170 KS): Modified License Agreement For Major Platform Technology Is A Hard Catalyst

By Tina Banerjee

  • Alteogen Inc (196170 KS) has modified the existing license agreement with Merck. Revised terms of the agreement grant Merck exclusive global right to ALT-B4 for a specific product group, pembrolizumab.
  • Under the terms of the revised agreement, Alteogen will receive an upfront payment of $20M from Merck. Alteogen will also receive additional milestone payment of up to $432M.
  • Approval of Alteogen’s first proprietary product, Tergase (expected in early 2024) will be the next major catalyst for the company.  

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Analytics and News
  • ✓ Events & Webinars



Most Read: China Traditional Chinese Medicine, Azure Minerals, Sea , NVIDIA Corp, Samsung C&T, CSR Ltd, Delta Electronics Thailand , Workday Inc Class A, Jusung Engineering and more

By | Daily Briefs, Most Read

In today’s briefing:

  • China Traditional Chinese Medicine (570.HK) – New Information on Privatization
  • TCM (570 HK): Sinopharm’s $4.60/Share Offer
  • Azure (AZS AU): MinRes’ Discounted Exit
  • Sea Will Release Its Q4 2023 Earnings Report Soon
  • From Nvidia Results to See Supply Chain Stories?
  • The Launch of 1st Corporate Value Up ETF on 27 February – Focus on Low PBR and Cash Flow
  • CSR (CSR AU): Saint Gobain’s $9/Share NBIO
  • Delta Electronics (DELTA TB / 2308 TT): More Downside from Here
  • Quiddity Leaderboard S&P 500 Mar 24: Big Index Flows Possible for Workday and KKR
  • FnGuide Semiconductor Top10 Index Rebalance Preview: One Change Likely; Close Among Potential Adds


China Traditional Chinese Medicine (570.HK) – New Information on Privatization

By Xinyao (Criss) Wang

  • Since China TCM doesn’t deny the rumors so far after the trading halt, privatization is becoming likely this time.Rumor said formal negotiations may not begin until after the Lantern Festival.
  • CNPGC may not want to pay high prices on privatization.Weak sentiment/share price may help with the negotiations.But the key is to obtain the consent of other shareholders, especially Ping An.
  • There’s underlying logic for Taiji Group to drive this privatization. A price of higher than HKD5.1 is possible. If the price could reach HKD6 (or higher), it has exceeded expectations.

TCM (570 HK): Sinopharm’s $4.60/Share Offer

By David Blennerhassett

  • $4.60/Share. That’s the number – by way of a Scheme – that only matters. Below the recently rumoured $6/share, and $5.10/share a little over three years ago. Terms are final.
  • As widely expected, the Offeror is SASAC-managed China National Pharmaceutical Group Corporation (CNPGC), indirectly owning 32.46% in China Traditional Chinese Medicine (570 HK) (TCM) via Sinopharm Group Hongkong,
  • Optically, the Offer price appears light. But this should still get up. TCM is trading rich to peers. No other competing bidder will emerge. Expect regulatory pre-cons to be fast-tracked.

Azure (AZS AU): MinRes’ Discounted Exit

By David Blennerhassett

  • JPMorgan is placing MinRes (MIN AU)‘s 14.5% stake in Azure Minerals (AZS AU) at A$3.42/share, a 5% discount to last close and a 7.6% discount to the A$3.70/share Scheme price. 
  • It was reported last month that MinRes, who paid up to ~A$4.00/share for some of its stake, was looking to exit. But cash now vs. ~8% more in two months?
  • Given the recent rout in lithium and nickel prices, one wonders if a MAC landmine lurks. Or, quite simply, MinRes just needs the cash. Expect Azure to fall tomorrow.

Sea Will Release Its Q4 2023 Earnings Report Soon

By Simon Torring

  • Shopee – Sea’s largest business unit and Southeast Asia’s largest e-commerce platform – has reported negative EBITDA for most of the 8 or so years since its launch. 

  • Investors now however appear to be looking for earnings growth. In 7 of the last 9 quarterly earnings reports, investors have rewarded the company every time it has reported earnings growth (its share price has gone up in the day after the release), and penalized when it has not.

  • Based on our analysis (and subject to the disclaimer included below), we expect Shopee’s GMV and Revenue to improve in Q4 2023 (as compared to the previous quarter) along with its EBITDA, although earnings will likely remain in negative territory.


From Nvidia Results to See Supply Chain Stories?

By Andrew Lu

  • Post 35% price gain in a quarter, many good news we expected and other analysts expected already factored into the share price. We believe the risk/reward not attractive here.
  • TSMC guides stronger 1Q24 and 2024, helped by Nvidia and copy cat AI GPU/ASIC orders. We see greater opportunities for alternative copy cat solutions like AMD and Alchip.
  • We attribute Nvidia customers’ sales discrepancy to AI server is cannibalizing non-AI server and Nvidia is allocating more GPUs to premium price paying customers in 1H24 and reverse in 2H24.

The Launch of 1st Corporate Value Up ETF on 27 February – Focus on Low PBR and Cash Flow

By Douglas Kim

  • Samsung Asset Management announced today that it will be launching the first Corporate Value Up ETF on 27 February. It will focus on low PBR and positive cash flow generators.
  • This ETF which will be called KoAct Dividend Growth Active ETF. There are about 45 stocks that are expected to be included in this ETF. 
  • Among the 92 companies in KOSPI 200 that are trading at less than 1x PBR, those that generate positive free cash flow are outperforming significantly. 

CSR (CSR AU): Saint Gobain’s $9/Share NBIO

By David Blennerhassett

  • Cie De Saint-Gobain (SGO FP) is offering CSR (CSR AU) shareholders A$9/share by way of a Scheme, a 34% premium to last close. That’s a knockout price.
  • The Offer is indicative. Confirmatory due diligence is ongoing. CSR board has, not surprisingly “unanimously resolved to pursue the offer at an agreed price of A$9.00“. 
  • A firm offer would be subject to FIRB and shareholder approval. Neither should pose an issue. Assuming a firm Offer is shortly forthcoming, this could be wrapped up late-July

Delta Electronics (DELTA TB / 2308 TT): More Downside from Here

By Brian Freitas


Quiddity Leaderboard S&P 500 Mar 24: Big Index Flows Possible for Workday and KKR

By Travis Lundy

  • The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
  • The index is reviewed quarterly. The next review will be in March 2024 and the evaluation date for the rankings for the constituent selection process is 29th February 2024.
  • In this insight, we take a look at Potential ADDs and Potential DELs for the rebalance. We estimate US$13.1bn one-way flow on 3 ADDs and 3 DELs.

FnGuide Semiconductor Top10 Index Rebalance Preview: One Change Likely; Close Among Potential Adds

By Brian Freitas


💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Analytics and News
  • ✓ Events & Webinars



Most Read: Gree Inc, China Traditional Chinese Medicine, Korea Stock Exchange Kospi Index, Azure Minerals, Itoki Corp, Union Bank Of India, Hanwha Corporation and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Gree (3632 JP) – Overnight Offering in Asset-Rich Value Trap as KDDI Sells Out
  • China Traditional Chinese Medicine (570.HK) – New Information on Privatization
  • Korea NPS Abruptly Joins Corporate Value Up Program: According to Document Obtained from NPS
  • Azure Minerals (AZS AU): MinRes Selling Out Paves the Way for the Scheme
  • Itoki (7972 JP) – Worth Thinking About Post Mega ToSTNeT-3 Buyback
  • Azure (AZS AU): MinRes’ Discounted Exit
  • Union Bank of India (UNBK IN) Placement: Using Index Inclusion Well
  • NPS Plans to Select Three Asset Management Companies For “Corporate Value Up” Program
  • China Traditional Chinese Medicine (570 HK): Sinopharm-Led Pre-Conditional Offer at HK$4.60
  • TCM (570 HK): Sinopharm’s $4.60/Share Offer


Gree (3632 JP) – Overnight Offering in Asset-Rich Value Trap as KDDI Sells Out

By Travis Lundy

  • Today after the close, KDDI Corp (9433 JP) and Gree Inc (3632 JP) announced that KDDI would offer its 8,000,000 shares in Gree in an international offering through Mizuho Intl.
  • The deal comes at a decently large discount and the stock is quite downtrodden. Especially when compared to its venture assets and cash, assuming invested amount is remotely viable.
  • The problem is that too much of revenue isn’t earning much, so this sits in a Value Trap category. Shareholder structure makes it difficult to do buybacks.

China Traditional Chinese Medicine (570.HK) – New Information on Privatization

By Xinyao (Criss) Wang

  • Since China TCM doesn’t deny the rumors so far after the trading halt, privatization is becoming likely this time.Rumor said formal negotiations may not begin until after the Lantern Festival.
  • CNPGC may not want to pay high prices on privatization.Weak sentiment/share price may help with the negotiations.But the key is to obtain the consent of other shareholders, especially Ping An.
  • There’s underlying logic for Taiji Group to drive this privatization. A price of higher than HKD5.1 is possible. If the price could reach HKD6 (or higher), it has exceeded expectations.

Korea NPS Abruptly Joins Corporate Value Up Program: According to Document Obtained from NPS

By Sanghyun Park

  • NPS abruptly joins ‘Corporate Value Up Program’, plans to select three asset managers. Deadline: this month’s 29th; results: March 19th, possibly linked to Korea Premium Index ETF launch in mid-May.
  • The document outlines guidelines, allocating 90-100% to value stocks, with KOSDAQ under 20%. While benchmarked to the internally-built index, it will likely focus on Korea Premium Index and KOSDAQ Global.
  • The fund size is crucial. NPS will disclose details later. But still, there is considerable room to this year’s ceiling for local equity; a significant amount could flow into this.

Azure Minerals (AZS AU): MinRes Selling Out Paves the Way for the Scheme

By Arun George

  • The AFR reports that JPMorgan is selling 14.5% of Azure Minerals (AZS AU) shares at A$3.42. The primary seller is said to be Mineral Resources (MIN AU), seeking to exit.
  • MinRes’ decision to sell out a discount rather than accept the scheme A$3.70 offer reflects the cost of securing a say on Andover and the opportunity cost of capital. 
  • The transaction booklet will be despatched in early March. At the last close and for an early May scheme payment, the gross/annualised spread is 2.5%/13.4%. 

Itoki (7972 JP) – Worth Thinking About Post Mega ToSTNeT-3 Buyback

By Travis Lundy

  • As discussed in Itoki (7972) Mammoth Buyback Coming Imminently After 35% Jump, the company was going to do a mega ToSTNeT-3 buyback between then and end-Feb. That happened this morning.
  • The company bought back 7.966mm shares (13.96%) for ¥15.9bn. That should have cleared out the bulk of the risk of the original warrant holders who bought in 2020. But…
  • The dilution/accretion don’t offset perfectly, and there is a clause suggesting how this might play out from here. But we can infer things from other data we now have.

Azure (AZS AU): MinRes’ Discounted Exit

By David Blennerhassett

  • JPMorgan is placing MinRes (MIN AU)‘s 14.5% stake in Azure Minerals (AZS AU) at A$3.42/share, a 5% discount to last close and a 7.6% discount to the A$3.70/share Scheme price. 
  • It was reported last month that MinRes, who paid up to ~A$4.00/share for some of its stake, was looking to exit. But cash now vs. ~8% more in two months?
  • Given the recent rout in lithium and nickel prices, one wonders if a MAC landmine lurks. Or, quite simply, MinRes just needs the cash. Expect Azure to fall tomorrow.

Union Bank of India (UNBK IN) Placement: Using Index Inclusion Well

By Brian Freitas

  • Union Bank Of India (UNBK IN) is looking to raise up to INR 30bn (US$362m) with the floor price set at INR 142.78/share and a maximum discount of 5%.
  • The stock has run up a lot and with index inclusion around the corner, this is as good a time as any to issue stock.
  • Union Bank Of India (UNBK IN) trades cheaper than peers and could continue to outperform over the near-term.

NPS Plans to Select Three Asset Management Companies For “Corporate Value Up” Program

By Douglas Kim

  • On 21 February, NPS announced that it will select three domestic asset management companies to manage funds that will be allocated to the “corporate value up” program. 
  • NPS plans to accept proposals from the local asset management and investment advisory companies from 21 to 29 February. NPS is likely to finalize the selected candidates sometime in March. 
  • We provide a list of 34 companies where the NPS has at least 5% ownership stake, with PBR of 0.5x or less, and included in KOSPI 200.

China Traditional Chinese Medicine (570 HK): Sinopharm-Led Pre-Conditional Offer at HK$4.60

By Arun George

  • China Traditional Chinese Medicine (570 HK) announced a privatisation offer from the Sinopharm-led consortium at HK$4.60 per share, a 47.4% premium to the undisturbed price.
  • The pre-condition relates to various Chinese regulatory approvals. As SOE entities own the offeror, regulatory approvals will be a formality. The offer price is final. 
  • Ping An Insurance (H) (2318 HK), which holds a blocking stake, will be supportive. The offer is fair when the previously (higher) rumoured offers are adjusted for the market downturn. 

TCM (570 HK): Sinopharm’s $4.60/Share Offer

By David Blennerhassett

  • $4.60/Share. That’s the number – by way of a Scheme – that only matters. Below the recently rumoured $6/share, and $5.10/share a little over three years ago. Terms are final.
  • As widely expected, the Offeror is SASAC-managed China National Pharmaceutical Group Corporation (CNPGC), indirectly owning 32.46% in China Traditional Chinese Medicine (570 HK) (TCM) via Sinopharm Group Hongkong,
  • Optically, the Offer price appears light. But this should still get up. TCM is trading rich to peers. No other competing bidder will emerge. Expect regulatory pre-cons to be fast-tracked.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Analytics and News
  • ✓ Events & Webinars



Most Read: SENKO Group Holdings Co., Ltd., Bizlink Holding, Yankuang Energy Group, Naver Corp, Snow Peak Inc, Royal Gold Inc, Cosco International Holdings, CIMC Vehicle Group Co Ltd, Taihan Electric Wire, Trial Holdings and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Senko Group (9069 JP) Offering – Banks and Insurers Unwinding Cross-Holdings in Offering
  • Yuanta/​P-Shares Taiwan Div+ ETF Rebalance Preview: One Deletion & Capping Changes
  • FXI Rebalance Preview: Three Potential Changes as Big Moves Unfold
  • Initial Thoughts on the Webtoon Entertainment IPO
  • Snow Peak (7816) – Bain Deal at ¥1,250 – 46% Premium Is Nice, Not A Home Run
  • Quiddity Leaderboard MV J-Gold Miners Mar 24: One High-Conviction DEL and More Low-Conviction Cases
  • COSCO Shipping (517 HK) Is Still Cheap
  • CIMC (1839 HK): Justification For Unjust Offer Price?
  • Monitoring LG Display’s Stock Rights Trading
  • Trial Holdings Pre-IPO – Refiling Updates – Margin Uptick, More Golf Courses


Senko Group (9069 JP) Offering – Banks and Insurers Unwinding Cross-Holdings in Offering

By Travis Lundy

  • SENKO Group Holdings Co., Ltd. (9069 JP) today announced large financial institutional cross-holders would sell shares in a Secondary Offering. There’s a buyback on the back end.
  • Cross-Holding unwinding is the subject of the moment. It will continue to be so. It will involve selldowns, and buybacks. Study the model of what companies must do what. 
  • In this case, Senko has a LOT of cross-holders and minimal excess cash. So investors buy more shares. But there is a buyback and index demand to come.

Yuanta/​P-Shares Taiwan Div+ ETF Rebalance Preview: One Deletion & Capping Changes

By Brian Freitas

  • Bizlink Holding (3665 TT) should be deleted from the Yuanta/​P-Shares Taiwan Dividend Plus ETF in March and that will trigger selling of over 8 days of ADV.
  • There will be capping and funding flows due to the higher AUM and passive trackers will need to trade over 0.4x ADV in 5 stocks.
  • Shorts have covered positions in Bizlink Holding (3665 TT) but there has been a recent uptick that could be linked to positioning for the rebalance.

FXI Rebalance Preview: Three Potential Changes as Big Moves Unfold

By Brian Freitas


Initial Thoughts on the Webtoon Entertainment IPO

By Douglas Kim

  • Naver Corp (035420 KS) is trying to complete the IPO of its affiliate Webtoon Entertainment in the US stock market as early as June 2024. 
  • The expected value of Webtoon Entertainment (post IPO) is about US$3 billion to US$4 billion. Webtoon Entertainment is seeking to raise about US$500 million in this IPO. 
  • The IPO of Webtoon Entertainment in the US is likely to have a positive impact on Naver Corp (035420 KS).

Snow Peak (7816) – Bain Deal at ¥1,250 – 46% Premium Is Nice, Not A Home Run

By Travis Lundy

  • The possibility/likelihood of a “¥50bn MBO” for Snow Peak Inc (7816 JP) was leaked in a Nikkei article last Friday. It went limit up two days in a row. 
  • That TOB price is more than 70% off its three-year high. That will certainly disappoint some. Separately, the price seems a bit low given growth. 
  • The family and friends own ~42% so if someone gets upset, or uppity, there could be a challenge. Just because an MBO exists doesn’t mean people have to tender in.

Quiddity Leaderboard MV J-Gold Miners Mar 24: One High-Conviction DEL and More Low-Conviction Cases

By Travis Lundy

  • The MV J-Gold Miners index represents the performance small-cap gold and silver mining companies listed around the world.
  • This index is reviewed semi-annually in March and September. During these reviews, names can be added or deleted from the index.
  • In this insight, we take a look at the potential ADDs and DELs and our flow expectations for the index rebal event in March 2024. 

COSCO Shipping (517 HK) Is Still Cheap

By David Blennerhassett

  • In More Hong Kong Stocks Priced For Liquidation, I flagged thirteen stocks the market is all-but implying are priced for liquidation. 
  • One of the cut-off points in that analysis was a requirement for stocks to trade at least US$1mn/day. Removing that constraint uncovers shipping services play COSCO International Holdings (517 HK) (CSI).
  • CSI’s market cap accounts for ~86% of its 1H23 net cash position. Earlier this month, CSI announced another positive profit warning. Those numbers should be out late-March.

CIMC (1839 HK): Justification For Unjust Offer Price?

By David Blennerhassett

  • On the 28 November 2023, SOE-backed CIMC Vehicle Group Co Ltd (1839 HK) announced a conditional H-share buyback at a $7.00/H-share, a forgettable 8.6% premium to last close.
  • This Voluntary Offer followed by a Merger by Absorption requires shareholder approval and SAFE signing off. The SAFE condition was satisfied on the 26th Jan.
  • Last night, CIMC announced the CBP investigation into the evasion of  U.S. anti-dumping and countervailing duties was extended. There is no mentioned in interim accounts or HKEx of this investigation.

Monitoring LG Display’s Stock Rights Trading

By Sanghyun Park

  • LG Display’s tight stock rights trading prompts a need to assess potential trading opportunities. Taihan Electric Wire’s concurrent capital increase warrants close observation.
  • Watch for a potentially wider spread in Taihan Electric Wire’s stock rights trading from the 22nd, given local institutional demand focus on LG Display may create a buying vacuum.
  • Observers speculate on a CJ CGV-like pattern at LG Display. With no current market movements, predicting such a scenario is difficult. Nonetheless, I’ll monitor closely and share any developments.

Trial Holdings Pre-IPO – Refiling Updates – Margin Uptick, More Golf Courses

By Sumeet Singh

  • Trial Holdings (5882 JP) (TH) is now looking to raise around US$234m in its Japan IPO, after having canceled its prior listing attempt last year.
  • TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
  • We have looked at the past performance in our previous notes. In this note, we talk about the updates from its recent filings.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Analytics and News
  • ✓ Events & Webinars